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Budget weighs heavy as legislative session winds down

Revenues improve, but state lacks long-term solution
June 18, 2018

Last year's austerity measures paved the way for this year's state budget surplus, but elected officials warn there is more work to be done.

“Nobody wants to go back there,” said Speaker of the House Rep. Pete Schwartzkopf, D-Rehoboth. “As long as I'm here, we'll never go back there.”

Schwartzkopf joined President Pro Tempore Sen. Dave McBride, D-Wilmington Manor, for the State Chamber of Commerce Legislative Brunch June 7, giving members an update as the legislative session winds down.

Schwartzkopf said last year's 20 percent cuts to grant-in-aid funding for senior citizen programs such as the senior citizen prescription program and Meals on Wheels have been restored this session, but care must be taken not to overspend the budget surplus by approving every request for money.

“When you have austere budgets for so many years, they come out of the woodwork,” he said of the increasing number of groups asking for money.

McBride said the Legislature has begun discussing a recent report by a council of financial experts, established by the Legislature last year, tasked with addressing the state's systemic fiscal difficulties and long-term budget challenges.

In a newsletter, State Treasurer Ken Simpler shared some of the council's recommendations.

The council called for a new reserve account called the budget stabilization fund that would grow to 10 percent of gross general fund revenues. The amount is twice the size of the current budget reserve account, and would help the state weather most historical downturns with minimal or no cuts in expenditures or revenue enhancements. The report also recommends reforming the personal income tax, although details on how that would be done are scarce. The report also suggests reducing Delaware's highest tax rate, which is 6.6 percent for taxable income above $60,000, but there is no further explanation of what new tax brackets would look like.

At the Legislative Brunch, McBride said the smoothing process, which would level out budget surpluses and shortfalls, is important, even if changes are not enacted this legislative session.

“I'm not sure if we'll get it done this year, but it's certainly something we need to do,” he said.

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